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Why is inequality so high, but also so variable, in Sub-Saharan Africa?

Working papers

Levels of income and/or consumption inequality are on average at least as high in sub-Saharan Africa as they are in Latin America. They are also highly variable. The paper makes an initial attempt to explain these findings using cross-country econometrics. We find that around 50% of the region’s high level of inequality can be attributed to its underlying factor endowments, notably its high ratios of land to labour ratios, its sometimes high ratios of known minerals to land ratios, and the large proportion of its land area which is located in the tropics. However, the same factors account for only a small proportion of the variation in levels of inequality within the region. A fuller explanation will require further work, with the most promising route being case-study analysis.

Edward Anderson and Andy McKay